House committee considers limiting deficiency judgment window

The House of Delegates’ Environmental Matters Committee approved a bill on Friday limiting the time a bank can seek a deficiency judgment, but not as strictly as advocates would like.

The Senate Judicial Proceedings Committee approved an amended version of the bill on Thursday. That bill was amended to limit the window in which a bank can file for a deficiency judgment to 3 years through a civil action or foreclosure sale. The Environmental Matters Committee bill has amendments similar to the Senate version.

Originally advocates were pushing to limit the window for banks to pursue a deficiency judgment to three years through a civil action and 180 days through foreclosure sale. Currently banks have 12 years to pursue a deficiency judgment.

Banks pushed back against the effort to shorten the window they could pursue a deficiency judgment, arguing that by shortening the window it could result in a deficiency judgment being pursued every time the sale of a property doesn’t cover the initial loan.